Issue No. 204 / May 6^th , 2020  

Dear Professionals,

“Taxsutra Database”, a true Income-tax Research is an archive of over 106870+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent ‘unreported handpicked ruling of SC, HC & ITAT’. A completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience; Search results supported by active filters around Court Level, Location, Case Numbers and Citation; A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"  

We are glad to present to you the 204^th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with recent rulings.

1) HC : Appellate Authority is to determine the appropriate amount of tax, if any, which is liable to be paid – HC sets aside the lower authorities’ order, restores Assessee’s appeal before CIT(A) for fresh adjudication on all grounds; Notes that, appeal before HC was admitted against ITAT order which held that capital gain would be applicable in AY A.Y 2009 -10 when the original transaction took place and not the year of rectification deed executed altering the original sale deed. However, Chartered Accountant who appeared before the CIT(A) ............... Click here to read and download HC judgment

          Note: HC sets aside ITAT order reported in [TS-5359-ITAT-2014(PANAJI)-O]

2) Interest earned on Bank deposits not eligible for deduction u/s 80IB(10) – ITAT holds that interest income earned was from the investment made by the assessee in Bank deposits and not from the business of the assessee of developing housing projects; Notes, that the expression “derived from” in section 80IB(10) envisages a direct or first degree connection of the income eligible for ............... Click here to read and download ITAT order

3) HC upholds addition treating advance money not used for the purpose for which received, as income - HC observes that it was not merely that the advance received was treated as income by the AO, the addition was made as the advance money (received for the purpose of procuring land on behalf of TATA Housing) was used for purpose other than procuring the land and no document/ evidence was produced to support the claim that there was no surplus being generated from the said advance thereby with-holding the information .............. Click here to read and download HC judgment

4) ITAT: Addition based on mere presumption, guess-work or conjectures without affording opportunity of being heard, unsustainable - ITAT upholds CIT(A)’s order deleting addition of Rs. 10.20 crores on account of alleged difference in receipts as per the bank account of the assessee and receipts as per its books of account for an assessee engaged in the business of equity trading, derivatives trading and in real estate investment; Notes that the AO made additions on the basis of certain information .............. Click here to read and download ITAT order

5) HC: Private trust properties cannot be attached to recover tax dues of the trustees - HC admits writ, quashes attachment orders in respect of properties held by the Family Benefit Trust (‘the trust’) and recovery notices against the trust; HC notes that the trust was formed and settled by the Will of .......... Click here to read and download HC judgment

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Expert Column

Registration u/s 12AA is condition precedent to claim exemption under Sections 11 to 13 of the IT Act and charitable institutions also need to be registered u/s 80G of the IT Act for its donors to avail deductions. At the stage of granting registration, objects of trust / institution, purported utilization of its income, application of funds for charitable purposes, actually commenced etc usually form the grounds of consideration for grant of registration to these trusts. Recently in the case of Ananda Social & Educational Trust reported in [TS-5038-SC-2020-O] SC finally provided relief to those Charitable Trusts that have been denied registrations until now, solely for not undertaking any activities prior to applying for registration, SC held that “a newly registered Trust is entitled for registration u/s. 12AA on the basis of its objects, without any activity having been undertaken”.  

In this regard Jatin Proothi (Chartered Accountant) in his article highlights that in many cases it was not possible to satisfy the CIT(E)s about whether the activities of the trust are genuine or not as required by sub clause (i) of clause (a) of sub section (1) of Section 12AA. The author examines the SC judgment to opine that it will save many newly registered public charitable or religious trust on the issue of grant of registration u/s 12A without any activities carried on by them.  

Click here to read the article titled - “‘Activities’ includes ‘proposed activities’ - a sigh of relief to newly formed Trusts

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